Watkins & Eager, PLLC v. Lawrence

• Decision Date: 07 October 2021
• Docket Number: No. 2020-IA-00547-SCT,2020-IA-00547-SCT
• Citation: 326 So.3d 988
• Parties: WATKINS & EAGER, PLLC v. Richard T. LAWRENCE
• Court: Mississippi Supreme Court

326 So.3d 988

WATKINS & EAGER, PLLC

v.Richard T. LAWRENCE

No. 2020-IA-00547-SCT

Supreme Court of Mississippi.

October 7, 2021

ATTORNEYS FOR APPELLANT: R. DAVID KAUFMAN, M. PATRICK McDOWELL, JACOB ARTHUR BRADLEY, Jackson

ATTORNEY FOR APPELLEE: JAMES ASHLEY OGDEN, Jackson

BEFORE RANDOLPH, C.J., ISHEE AND GRIFFIS, JJ.

RANDOLPH, CHIEF JUSTICE, FOR THE COURT:

¶1. Watkins & Eager, PLLC ("Appellant"), brings an interlocutory appeal of the decision of the Hinds County Circuit Court. Appellant argues that the circuit court erred by denying the firm's motion to dismiss for failure to state a claim under Mississippi Rule of Civil Procedure 12(b)(6). Appellant contends that the provisions at issue within its operating agreement were structurally unambiguous and authorized the firm to terminate any member, including Richard Lawrence ("Appellee") for any reason whatsoever. Furthermore, the firm opposes Appellee's attempt to shoehorn a McArn exception into this dispute. See McArn v. Allied Bruce-Terminix Co., Inc. , 626 So. 2d 603, 607 (Miss. 1993).

¶2. Reviewing the complaint and the PLLC operating agreement central to the dispute, the Court holds that Appellee's breach-of-contract and wrongful-termination claims should be dismissed. Appellee also pleaded twenty-eight separate additional claims that emanate from the same alleged breach resulting in Appellee's expulsion from the firm. We find that Appellant exercised rights found in the agreement, which were not ambiguous. Accordingly, we find all claims within the complaint fail as a matter of law. We reverse and remand the case to the Hinds County Circuit Court to enter a judgment consistent with this opinion.

FACTUAL AND PROCEDURAL HISTORY

¶3. Appellee filed his original complaint in Hinds County Circuit Court on December 30, 2019. Appellant moved to dismiss the complaint for failure to state a claim. The trial court granted the motion and granted Appellee leave to amend his complaint. On March 16, 2020, Appellee filed an amended complaint alleging thirty claims: (1) breach of the PLLC Operating Agreement; (2) wrongful termination; (3) negligent acts of bad faith; (4) negligent interference with work; (5) malicious and intentional interference with employment; (6) negligently and intentionally acting in an unethical manner in attempt to poach clients; (7) general negligence; (8) breach of good faith and fair dealing; (9) negligent and intentional acts in violation of the firm agreement; (10) intentional interference with contractual relations; (11) intentional interference of business relationships; (12) breach of fiduciary duty; (13) fraud and misrepresentation; (14) negligent infliction of emotional distress; (15) intentional infliction of emotional distress; (16) interference with an advantageous business situation; (17) property damage; (18) conversion and conspiracy to convert; (19) libel and defamation; (20) slander per se; (21) slander; (22) defamation of character; (23) harassment; (24) fraud in overbilling; (25) breach of fiduciary duty of loyalty; (26) breach of fiduciary duty of reasonable care; (27) breach of good faith by executive committee; (28) conspiracy (29) conspiracy to steal; (30) and embezzlement.

¶4. Appellee is an attorney who has been licensed to practice law in the state of Mississippi since 1979. Appellee averred that he has garnered a reputation as a competent and honest attorney. Appellee averred that had he worked at Watkins and Eager for more than 40 years. Appellee averred that the firm only employed two African American attorneys from 2017 to 2019, which led him to report acts of discrimination. Appellee alleged that he was terminated and expelled without cause in December 2019. Appellee alleged he did not receive adequate notice of his termination and a chance to be heard. Appellee alleged his expulsion was based on reporting of illegal activities occurring within the firm. Appellee averred that he was acting as a whistleblower and was entitled to the same protections afforded to employees of businesses. See McArn v. Allied Bruce-Terminix Co., Inc. , 626 So. 2d 603, 607 (Miss. 1993).

¶5. On May 18, 2020, Appellant filed an answer denying Appellee's claims. Prior to filing their answer to the amended complaint, Appellant filed a motion to dismiss under Mississippi Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted, which is the subject of this appeal. Appellant argued that Appellee failed to allege sufficient facts in his amended complaint that would support a cause of action against the firm. Appellant further urged that the wrongful termination claim failed as a matter of law because the Mississippi Supreme Court has never extended McArn outside of an employer-employee context.

¶6. The circuit court held a hearing on the motion to dismiss. Subsequently, on May 8, 2020, the circuit court entered an order denying Appellant's motion to dismiss in full. The court found that "there are issues of ambiguity in the operating agreement" and "there were a number of [other] issues that the Court sees needs to be fleshed out."

¶7. Appellant petitioned for interlocutory appeal, appealing the circuit court's determination.

A panel of this Court granted the petition on July 23, 2020.¹

STANDARD OF REVIEW

¶8. A motion to dismiss for failure to state a claim upon which relief can be granted raises an issue of law, which is reviewed de novo. Jourdan River Ests., LLC v. Favre , 212 So. 3d 800, 802 (Miss. 2015).

ANALYSIS

I. As a matter of law, Appellee fails to state a claim for breach of contract.

¶9. This Court has held that a plaintiff asserting any breach-of-contract claim has the burden to establish: (1) "the existence of a valid and binding contract," and (2) a showing "that the defendant has broken, or breached it." Maness v. K & A Enters. of Miss., LLC , 250 So. 3d 402, 414 (Miss. 2018) (quoting Bus. Commc'ns, Inc. v. Banks , 90 So. 3d 1221, 1224 (Miss. 2012) ). A breach is material when there is "a failure to perform a substantial part of the contract or one or more of its essential terms or conditions, or if there is such a breach as substantially defeats [the purpose of the contract]." Ferrara v. Walters , 919 So. 2d 876, 886 (Miss. 2005) (emphasis added) (quoting Gulf S. Cap. Corp. v. Brown , 183 So. 2d 802, 805 (Miss. 1966) ).

¶10. We begin by examining the text of the agreement governing the relationship between the two parties. At issue is the 1996 Watkins & Eager PLLC Agreement and the 2008 Amended Agreement. The agreement provides for hearings with notice. The agreement directs meetings are to be held in this manner: "All meetings shall be held at such time and place, within or without the state of Mississippi, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof."

¶11. Article 4.12 defines an action without meeting:

Any Action required by the act to be taken at the meeting of the Members, or any action which may be taken at the meeting of the members, may be taken without a meeting, without prior notice, and without vote, if a consent or consents in writing, setting forth the actions so taken, shall be signed by sufficient members to approve the action taken and such consent shall have the same force and effect as a vote of the required number of members.

Further, the expulsion resolution, containing the requisite written consent, was attached to the complaint.

¶12. Here, this Court holds that the amended PLLC agreement is a valid and binding contract. "In Mississippi, ‘an LLC operating agreement is a contract’ and should be interpreted according to contract law." Martindale v. Hortman Harlow Bassi Robinson & McDaniel PLLC , 119 So. 3d 338, 341-42 (Miss. Ct. App. 2012) (quoting Bluewater Logistics, LLC v. Williford , 55 So. 3d 148, 159 (Miss. 2011) ). Appellant maintains that the above provisions allowed them to terminate Appellee for any reason or no reason at all without an official meeting. Additionally, Appellant further argues that Article 4.12 is unambiguous on its face as a matter of law. Appellee asks the court to ignore that provision and points to other specific provisions within Article 4, which he argues create ambiguity and negate application of Section 4.12. In short, Appellee claims Section 4.12 is in direct violation of Article IV, Section 4.03, "Place and Manner of Meeting," Article IV Section 4.07, and Article IV, Section 4.08, which require notice of all meetings. Therefore, the circuit court was required to consider whether Article IV of the PLLC operating agreement was ambiguous vel non.

¶13. "It is a question of law for the court to determine whether a contract is ambiguous and, if not, enforce the contract as written." Royer Homes of Miss., Inc. v. Chandeleur Homes, Inc. , 857 So. 2d 748, 751 (Miss. 2003) (citing Miss. Transp. Comm'n v. Ronald Adams Contractor, Inc. , 753 So. 2d 1077, 1087 (Miss. 2000) (citing Universal Underwriters Ins. Co. v. Ford , 734 So. 2d 173, 176 (Miss. 1999) ). "If the terms of the contract are subject to more than one reasonable interpretation, it is a question properly submitted to the jury." Id. at 752. "The mere fact that the parties disagree about the meaning of a provision of a contract does not make the contract ambiguous as a matter of law." Delta Pride Catfish, Inc. v. Home Ins. Co. , 697 So. 2d 400, 404 (Miss. 1997) (quoting Cherry v. Anthony, Gibbs, Sage , 501 So. 2d 416, 419 (Miss. 1987) ).

¶14. Here, the language of the 1996 PLLC agreement and the 2008 modification are clear and understandable. This Court finds the contracts to be unambiguous. Without question, the provision at issue clearly and unambiguously reads that action can be taken in the absence of a meeting. Any action without meeting must be signed by sufficient members, and Appellant is within its rights to do so under the terms of the agreement. The agreement also provides that Appellant reserved the right to expel a member by a vote of the...